Anthony Butler, CTO, IBM Cloud, MEA, shares compelling insights into the fast-growing cloud services business, and explains why the hybrid cloud is integral to business innovation.
In what ways is cloud computing changing from a purely cost-based model to a driver of business innovation?
Cloud began as a means of optimising cost. For example, replacing CAPEX with OPEX; benefiting from the elasticity of the cloud; driving server consolidation; and reducing labour by leveraging the economies of scale provided by the cloud. However, IBM’s view is that cloud, whilst delivering bottom line optimisation, can increasingly become a significant source of revenue growth and competitive advantage.
Firstly, cloud reduces the marginal cost of innovation: companies can experiment, try new ideas, and get them to market quickly and without major commitment of time, resources or capital. They can get feedback in real time and, through use of DevOps, accelerate the speed at which they deliver new features and functionality to their customers.
Secondly, cloud isn’t just about hosting some apps in a multi-tenant virtualised environment; it’s increasingly about getting access to new services and capabilities. For example, we make our cognitive computing capabilities available in the cloud such that anyone can access them without needing to make the vast investment in compute power that would otherwise be required to run such workloads. This opens up tremendous opportunities for innovation because customers are no longer constrained by what they have in their data centre or what they have the budget to procure.
Third, cloud is also about global reach and scale. The smallest start-up in the smallest village in the smallest country not only has access to the same computing power as a Fortune 500 company but, through the global reach of the cloud, can now host their app in any market.
How does the cloud services segment fall into IBM’s overall strategy?
Cloud is important to our clients, with 44 per cent of enterprises worldwide now relying on cloud in order to launch new business models.(1) It is also important to IBM both as a set of offerings to these clients but also as the platform that we ourselves are using to deliver the rest of the IBM business; whether analytics, cognitive, internet of things or security. IBM is now a cloud platform and cognitive solutions company; a succinct definition that demonstrates the fact that cloud is now fundamental to our company strategy and direction moving forward. This is also reflected in our business results.
What are hybrid technologies and why are they important?
Hybrid technologies (or hybrid cloud) are born out of a recognition that enterprises are not just going to move everything to a public cloud. They have existing investments that need to be maintained and, for performance, security or other reasons, some workloads need to continue to run within the data centre. A hybrid cloud represents this reality: offering clients the ability to run some workloads in a private cloud and some in a public cloud. We have developed a set of technologies to secure connect with IBM and third party public cloud services such that clients can unlock the value in their data centres by extending these capabilities into the cloud securely.
We are now seeing many organisations in the Middle East adopting this architecture. They are keeping their Systems of Record, such as ERP or CRM systems, securely in their data centre; but then connecting these systems with applications that are built to run in the cloud, such as mobile platforms. These hybrid applications are gaining momentum across industries as businesses realise that cloud doesn’t mean compromise; and hybrid can help them reduce IT costs, move faster, innovate, whilst, at the same time, not compromising on security or regulatory constraints. Currently, around 70 per cent of our cloud business is comprised of hybrid cloud technology.
Can you tell us about the role cognitive solutions plays within IBM’s cloud business?
Cognitive is what we would characterise as the third era of computing: the latest continuation of an evolution that began with tabulating machines then programmable machines and now machines that can see, speak, hear, and reason much like a human. For example, we recently developed an application called Watson Trend that could analyse unstructured data sourced from across the internet to uncover new consumer trends or patterns around brand or product choices: a kind of early warning system for trends and fads.
Cognitive solutions or capabilities are delivered from the cloud so the two are linked very closely. On the one hand, this makes sense since to train an algorithm to see or read, it can require significant computing power and storage. Since we believe cognition is something that all companies – large and small – can benefit from, by hosting this in the cloud, we democratise access by mitigating the need to procure the necessary compute or storage to do this kind of work. Developers can just focus on what offers differentiated value – the code and the data – and leverage the cognitive services that we make available, in our Cloud, as APIs.
In what way are cloud technologies particularly useful to SMEs?
Cloud is particularly useful to SMEs for a number of reasons. Firstly, by reducing IT costs significantly and removing capital, it unlocks financial resources that can applied to things that actually deliver differentiating value to a business as opposed to hardware and data centres. Secondly, it gives SMEs access to the same computing power as their larger competitors thus evening the playing field. Thirdly, it facilitates innovation. Take for example UAE-based start-up Wrappup, which is using IBM Watson for tools that will transform how you have your next meeting. Their app increases meeting productivity by tagging smart voice notes to create minutes, from hours of conversation. Talk about building a competitive advantage, regardless of your size.
How does your cloud offering set itself apart from competitors?
Whilst it has broadened with the advent of our cloud, our traditional customer base is enterprise: we understand what these clients want and need. We realise that they don’t want to discard all the existing investments they have made in IT systems to move to the Cloud; and we also appreciate that not every workload can or should run in the cloud. Yet, at the same time, these customers want the benefits that come with the cloud computing model. Hence, our focus is on hybrid cloud: offering choice with consistency where clients can choose to host some workloads and data in our public cloud, some in the private cloud, and with secure integration and orchestration between both worlds. This is in contrast with most of our competitors who have typically either focused on private cloud or public cloud.
A further differentiator is our embrace of open standards. Our platforms are open, whether it is our embrace of Cloud Foundry, Docker, Open Stack or, more recently, our contribution of 40,000 lines of blockchain code to the Hyperledger Project in Linux Foundation.
We understand that clients don’t want to be locked in to a “dead end” cloud and, just as we are constantly introducing new services into our cloud, we have designed it so that customers can easily move to other clouds and whatever investments they make are maintained. This is through open standards. At the same time, of course, we want our cloud to be so good that customers don’t want to leave.
“For us, cloud isn’t just about a virtualised environment or an alternative to running some servers in a data centre: it’s an enabler of digital innovation and, increasingly, the mechanism by which our clients will consume “IBM as a service”.”
We are opening new data centres on a regular basis, adding services to our cloud, and bringing the breadth and depth of IBM’s products and services to the platform such as cognitive, analytics, blockchain, video and more. By doing so, clients are getting much more than just some virtualised infrastructure and we consider this rich catalogue of cloud-based capabilities as being a key differentiator for us.